Lesson 9: Effective Negotiation

What You’ll Learn: A business negotiation requires a slightly different skill set than a personal one. In this lesson, we will look at how to effectively negotiate a contract or agreement so that both sides come out ahead.

Effective Negotiation (continued)

Negotiation Basics

There is no set way to negotiate a deal. Everyone has their own style, tone and process. Still, there are things you can do to prepare for a negotiation, regardless of how it plays out.

First, there are things you want to ask yourself as you prepare for the negotiation:

  • What exactly am I seeking out of this? What are my needs vs. wants?
  • What is driving the desire for this particular outcome?
  • Do I trust the party I am negotiating with?
  • What level of time, energy and emotional currency am I willing to invest in the negotiation and in the relationship as it evolves?
  • What is the perceived value for what I am offering? What does the market say? What is the expectation of the person I am meeting with?

Strategies You Can Incorporate

1. Break the project down

Breaking down the project into its individual line items can be a good way for your client to see the project from a different perspective. The general description of a job can encompass a ton of necessary steps, and outlining them can more fully explain your role in the project and the actual time it takes to complete the job.

For example, you could scope a job as Website Development. This can mean different things to different people. Your client may not understand all the work that goes into that, from selecting the content management platform and the necessary plug-ins, designing all the graphic elements, creating user journeys and developing the user interface, creating the navigation and architecture, building wireframes and mockups, doing user testing, and perhaps even some custom coding. You could go even further, outlining the number of planned review cycles and the warranty period that includes customer support. These can be used in a later step we’ll cover in a moment. Don’t put budget numbers on these items. You want to be able to parse out the project if the budget needs to be adjusted. You don’t want the client to do it.

2. Remind them about your experience and education

Sometimes clients will forget you are far more qualified than a newer company or in-house staff member who might be able to do the work. You want to gently remind the client of your experience and roll in a horror story or two of another client who used a newcomer or tried to do it in-house.

3. Highlight the savings

Compared to doing things in-house, you’re a steal, even at a higher rate. Remind them that they don’t need to worry about you calling in sick, punching out at 5 p.m. or taking a sudden vacation to the tropics. You are a business; you take care of everything for them without the headaches increased staffing (recruitment, onboarding, paperwork, additional benefits and taxes) creates.

4. Emphasize the value

If you’re working on a fixed-cost basis, you are a known entity. There is no black hole sucking money out the door as there is with an hourly rate. The cost upfront is the price the client pays at the end unless they want to add bells and whistles along the way and even those are fixed cost (at a price agreed upon before work commences). They get all your know-how for one predictable price.

5.  Suggest prioritizing work

If the prospect balks at the price, consider moving some things around. Go back to the project breakdown you created, the one that breaks out all the steps. Suggest removing a review round or offer to eliminate a step or two. You can also suggest doing things in stages, letting the client get on their feet with you and build trust along the way, so the next phase at that once-uncomfortable price seems like a bargain.

6. Let them lead the way

We covered this more extensively in pricing, but an excellent way to get your proposed budget closer to what the prospect had in mind is to ask them, “What’s your budget?” Tell them that it helps to know upfront since there are many ways you can accomplish the same thing. A budget range will help you choose the best way to approach the project so they get the maximum return on their investment. Most prospects will give a relatively large range, knowing the truth lies somewhere in the middle. If the number you had in mind is on the higher end, you can always adjust the scope to fit that number, again, reducing some of the steps you would typically take to find that number you both can agree upon.

7.  “Act” appropriately

If your prospect wants the world for a dollar, you can show your pain. It’s O.K. to roll your eyes a bit, give thoughtful consideration before responding, and even change the conversation momentarily to ask about a piece of décor in the room or a photo on the desk. This is not speed dating. This is a dialogue that will affect your bottom line. Don’t be too willing to give away the farm in your negotiations. If you hit a sticking point on a particular subject, you can always respond with, “My price point on that is regularly ‘X’ (a much higher number), but I want to build a long-term relationship with you, so I’m willing to meet you halfway” (or offer an alternative).

8. Cover the “extras”

Scope creep is a big problem in creative projects. There’s a tendency to ask for more and more, even when the project is fixed cost. Once you’re down to the nitty-gritty of the deal, you need to cover the possibility of additional fees for overages, such as additional work orders or requests to turn the work around in a much tighter timeframe. Your time and talent are never free. You need to clarify if there are rush fees and what would constitute a rush. Discussing this shows that you are clearly a business professional and not just a creative who wants a paycheck.

9. Get it in writing

After all the terms are worked out, you want to create a Scope of Work that outlines everything you will do for the project, what the timeline is, the agreed-upon fee, when the client can expect to see work in progress (milestones), payment terms and deliverables. You’ve already gone over most of this, so the Scope of Work becomes the contract, spelling out all the details you’ve already agreed upon. All it needs now is signatures and you’re off and running.